It’s a bold move for Australia, which currently holds the distinction of being the developed world’s highest CO2 emitter per capita. While it has taken steps to prevent this by introducing carbon taxes for the heaviest polluters, joining the EU carbon market is the biggest step yet.

Currently, Australia forces polluting companies to pay a levy of $24 for every ton of greenhouse gases they produce. While this does not seem like a massive fine, it has drawn fierce criticism from certain companies, who are unhappy about being financially stung.

However by joining the EU’s carbon market, Australian firms now have more options on how they can meet their CO2 reduction targets. This has drawn mixed criticism as it would allow Australian firms to compete better internationally, but it undermines the country’s current carbon taxes.

For those of you unfamiliar with carbon trading markets, they are generally based on cap-and-trade, which forces heavy-polluting companies to buy permits if they want to go above their set emission targets. However cleaner, greener firms can sell surplus permits to heavy polluters, creating a financial incentive for industry and power generators to cut emissions.

Speaking to BBC News, EU Commissioner for Climate Action Connie Hedegaard said “we now look forward to the first full international linking of emission trading systems”. “It is further evidence of strong international co-operation on climate change and will build further momentum towards establishing a robust international carbon market,” she added.

Australia’s Climate Change Minister Greg Combet said that linking the Australian and EU systems “reaffirms that carbon markets are the prime vehicle for tackling climate change and the most efficient means of achieving emissions reductions”. Australian firms will be able to buy EU permits in advance of trading them in 2015, with the final goal to have the Australian and EU schemes fully linked from July 2018.